Wesco International, Inc. · NYSE:WCC
Wesco International — Q4 2015 Earnings Presentation
24 slides from Wesco International's earnings presentation, Jan 28, 2016
Slide 1: Q4 & Year End 2015 Earnings Webcast Presentation
Webcast Presentation January 28, 2016 Q4 & Year End 2015 Earnings
Slide 2: Safe Harbor Statement
2 Q4 & FY 2015 Earnings Webcast, 1/28/16 Safe Harbor Statement Note: All statements made herein that are not historical facts should be considered as “forward- looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, un
Slide 3: 2015 Highlights
3 Q4 & FY 2015 Earnings Webcast, 1/28/16 2015 Highlights …performance in-line with most recent outlook Q4 • Organic sales were down 5% in the US and down 14% in Canada • Free cash flow of over 200% of net income Full Year • Organic sales were down 2% in the US and down 7% in Canada • Oil and gas sal
Slide 4: Industrial End Market
4 Q4 & FY 2015 Earnings Webcast, 1/28/16 Industrial End Market • Q4 2015 Sales − Down 17% versus prior year (down 11% in the U.S. and down 22% in Canada in local currency) − Down 2% sequentially − Sales declines driven by oil and gas, metals and mining and OEM customers • Reduced demand outlook, wea
Slide 5: Construction End Market
5 Q4 & FY 2015 Earnings Webcast, 1/28/16 • Q4 2015 Sales − Down 13% versus prior year (down 7% in U.S. and down 9% in Canada in local currency) − Down 5% sequentially − Sales declines driven by weakness with contractors serving industrial market partially offset by growth with commercial constructio
Slide 6: Utility End Market
6 Q4 & FY 2015 Earnings Webcast, 1/28/16 Utility End Market Core Sales Growth versus Prior Year 15% Utility • Investor Owned • Public Power • Utility Contractors • Q4 2015 Sales − Flat versus prior year (up 4% in U.S. and down 11% in Canada in local currency) − Down 1% sequentially • Fifth consecuti
Slide 7: CIG End Market
7 Q4 & FY 2015 Earnings Webcast, 1/28/16 CIG End Market • Q4 2015 Sales − Down 4% versus prior year (up 7% in US and down 22% in Canada in local currency) − Down 3% sequentially • Strong growth with government customers and bidding activity levels remain high. • Customer focus remains on energy effi
Slide 8: Q4 2015 Results
8 Q4 & FY 2015 Earnings Webcast, 1/28/16 Q4 2015 Results Outlook Actual YOY Sales (5)% to (8)% $1.86B (6.7)% growth (7.6)% organic, workday adjusted Gross Margin 19.5% Down 70 bps SG&A $257M, 13.8% Down 2%, Up 70 bps Operating Profit $90M Down 28% Operating Margin 5.0% to 5.2% 4.8% Down 140 bps Effe
Slide 9: Full Year 2015 Results
9 Q4 & FY 2015 Earnings Webcast, 1/28/16 Full Year 2015 Results Outlook Actual YOY Sales (4)% to (5)% $7.52B (4.7)% growth (3.3)% organic Gross Margin 19.9% Down 50 bps SG&A $1,055M, 14.0% Down 2%, Up 40 bps Operating Profit $374M Down 20% Operating Margin ~ 5.0% 5.0% Down 90 bps Effective Tax Rate
Slide 10: EPS Walk
10 Q4 & FY 2015 Earnings Webcast, 1/28/16 EPS Walk Q4 FY 2014 $1.40) $5.18) Core Operations (0.41) (0.95) Acquisitions (0.05) (0.10) Foreign Exchange Impact (0.08) (0.31) Tax (0.04) (0.06) Share Count 0.11) 0.22) 2015 $1.03) $4.18)
Slide 11: Cash Generation and Leverage
11 Q4 & FY 2015 Earnings Webcast, 1/28/16 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 230.7 261.4 2014 2015 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 125% of net income 84% of net income > $1B of free cash flow over last 4 years 2013 2014
Slide 12: 2016 Outlook
12 Q4 & FY 2015 Earnings Webcast, 1/28/16 2016 Outlook Q1 FY Sales (4)% to (1)% Flat to (5)% Operating Margin 3.8% to 4.1% 4.8% to 5.0% Effective Tax Rate ~30% ~ 30% EPS $3.75 to $4.20 Free Cash Flow >90% of net income Notes: Excludes unannounced acquisitions. Assumes a CAD/USD exchange rate of 0.70
Slide 13: Appendix
13 Q4 & FY 2015 Earnings Webcast, 1/28/16 Appendix
Slide 14: WESCO Profile 2015
14 Q4 & FY 2015 Earnings Webcast, 1/28/16 WESCO Profile 2015 39% 32% 15% 14% 40% 15% 15% 11% 10% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages report
Slide 15: Sales Growth
15 Q4 & FY 2015 Earnings Webcast, 1/28/16 Sales Growth 2013 2014 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Consolidated 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) (7.4) (6.7) (4.7) Acquisition Impact 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 1.2 1.6 2.0 3.0 2.0 Core (3.4) (1.4
Slide 16: Q4 2015 Sales Growth – Geography
16 Q4 & FY 2015 Earnings Webcast, 1/28/16 Q4 2015 Sales Growth – Geography U.S. Canada International Total Change in net sales 0.8 (26.0) (15.3) (6.7) Impact from acquisitions 4.4 - - 3.0 Impact from foreign exchange rates - (13.2) (8.8) (3.7) Impact from number of workdays 1.6 1.6 1.6 1.6 Normalize
Slide 17: Sales Growth - End Markets
17 Q4 & FY 2015 Earnings Webcast, 1/28/16 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth-End Markets Full Year 2015 vs. 2014 Q4 2015 vs. Q4 2014 Q4 2015 vs. Q3 2015 Q4 Q4 Q4 Q3 2015 2014 % Growt
Slide 18: Adjusted Tax Rate
18 Q4 & FY 2015 Earnings Webcast, 1/28/16 Adjusted Tax Rate ($ Millions) Q4 2015 FY 2015 Reported Results Adjustments (1) Adjusted Results Reported Results Adjustments (1) Adjusted Results Income before income taxes 80.1 (9.4) 70.7 303.9 (9.4) 294.5 Provision for income taxes 31.5 (11.7) 19.8 95.5 (
Slide 19: Debt Maturity Schedule and Capital Structure
19 Q4 & FY 2015 Earnings Webcast, 1/28/16 Outstanding at December 31, 2014 Outstanding at December 31, 2015 Debt Maturity Schedule AR Revolver (V) 430 525 2018 Inventory Revolver (V) 8 75 2020 Senior Notes (F) 500 500 2021 2019 Term Loans (V) 252 175 2019 2029 Convertible Bonds (F) 345 345 2029 (1)
Slide 20: Financial Leverage
20 Q4 & FY 2015 Earnings Webcast, 1/28/16 Financial Leverage Twelve Months Ended December 31, 2015 Financial leverage ratio: Income from operations $ 374 Depreciation and amortization 65 EBITDA $ 439 December 31, 2015 Current debt and short-term borrowings $ 44 Long-term debt 1,457 Debt discount rel
Slide 21: Convertible Debt and Non-Cash Interest
21 Q4 & FY 2015 Earnings Webcast, 1/28/16 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (163.3) 181.6 Convertible Debt At December 31, 2015 Non-Cash Interest Expense ($ Millions) 2013 2014 2015 Convertible Debt 4.3 4.1 6.1 Amortization of Deferred Financing
Slide 22: EPS Dilution
22 Q4 & FY 2015 Earnings Webcast, 1/28/16 EPS Dilution Weighted Average Quarterly Share Count Stock Price Incremental Shares from 2029 Convertible Debt (in millions)3 Incremental Shares from Equity Awards (in millions) Total Diluted Share Count (in millions)4 $20.00 - 0.11 42.27 $30.00 0.45 0.20 42.
Slide 23: Free Cash Flow Reconciliation
23 Q4 & FY 2015 Earnings Webcast, 1/28/16 Free Cash Flow Reconciliation Q4 2014 Q4 2015 2014 2015 Cash flow provided by operations 111.4 107.1 251.2 283.1 Less: Capital expenditures (4.5) (5.5) (20.5) (21.7) Free Cash Flow 106.9 101.6 230.7 261.4 Note: Free cash flow is provided by the Company as an
Slide 24: Work Days
24 Q4 & FY 2015 Earnings Webcast, 1/28/16 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253 2016 64 64 64 62 254